Standard Chartered PLC shares sank Wednesday after the bank reported a series of drags on its turnaround plan.
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The stock fell almost 7% after third-quarter results missed analyst expectations and hopes dimmed for a dividend this year. Revenue in the quarter rose 4%, but so did costs, and the bank said margins in some of its key markets are still under pressure.
The Asia-focused bank has been exiting businesses, unloading assets and resetting its culture after earlier rapid growth left it with sprawling operations and piles of bad loans. Uncertainty around the pace of the turnaround has caused its share price to lag behind rivals. Previously, some targets set by Chief Executive Bill Winters and Chief Financial Officer Andy Halford in late 2015 had to be revised.
Mr. Halford didn't rule out paying a dividend this year, saying the bank would have a look at it at the end of the year. Standard Chartered started reducing, then suspended dividends in 2015 when it announced overhaul plans.
Mr. Halford on Wednesday said the bank is investing in technology and automation for retail banking, and that other spending to attract wealth-management and corporate clients should pay off in the longer term. He said one big element in costs, improving regulatory compliance systems, is close to peaking now.
For analysts, one sore point in the results was a reduction in the bank's capital position from a change in the way it calculates possible losses on exposure to certain financial institutions. The changes to its risk models, which require Standard Chartered to be more conservative about how much money it could lose from those exposures, were made after discussions with the U.K. banks regulator. Further changes to its models on some corporate exposures will be made next year, Standard Chartered said.
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Capital will also be slightly reduced from next year by a major accounting rule change, the bank said. IFRS9 requires banks to continually make provisions for expected losses on their loans, instead of only when there are actual or imminent losses.
Despite the gloom, Standard Chartered said pretax profit in the third quarter more than doubled, to $774 million from $317 million. The rise was mainly because of a fall in bad loans and lower restructuring costs compared with the third quarter of 2016.
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(END) Dow Jones Newswires
November 01, 2017 07:50 ET (11:50 GMT)